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A taxpayer-backed bank for pot money? Maybe in California

California officials announced Tuesday that they will take a detailed look at the possibility of creating a taxpayer-backed bank to handle what could be billions of dollars in revenue generated by the state's legal marijuana industry.

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California's state treasurer and attorney general will study whether the state should create its own publicly owned bank to serve the state's now-legal cannabis industry.

On a conference call Tuesday, State Treasurer John Chiang, a candidate for governor, said his office will look into costs, regulation and other operational issues the state would need to consider before creating such a bank -- an entity that would be one of just two in the nation.

Chiang said the office of Atty. Gen. Xavier Becerra also will perform a study looking at legal issues surrounding the creation of a public bank.

A public bank would be capitalized and owned by the state of California, not by private investors. There's been a growing movement over the past few years to create more public banks, driven by advocates' dissatisfaction with commercial banks.

More recently, those advocates have been joined by members of the cannabis industry, who hope that publicly owned banks could face less federal oversight and have an easier time providing bank accounts to cannabis businesses. The vast majority of commercial banks, which answer to federal regulators, shun cannabis businesses because the drug remains illegal under federal law.

City officials in Los Angeles, Oakland and San Francisco are looking into the idea of creating their own banks. But despite the interest, there is just one public bank in the nation -- the Bank of North Dakota -- and there are numerous obstacles to creating such an institution, especially if the plan is for the bank to openly work with cannabis companies.

Late last year, a cannabis policy working group organized by Chiang's office recommended looking into the feasibility of a state-owned bank. Chiang said Tuesday his office is issuing a request for information, a preliminary step toward that study.

Among other things, Chiang said the study will address whether a state-owned bank would have brick-and-mortar branches or operate mostly online, how the bank would be funded initially and whether deposits at the bank could be insured. He said he hopes to complete the study by the end of the year.

Chiang and other public officials have said the lack of banking access for cannabis companies, which has left the industry largely reliant on cash, poses public safety risks and makes it more difficult for the state and local agencies to monitor the industry and ensure businesses are paying their taxes.

"California and other states will need to lead when it comes to bringing the cannabis industry out of the shadows so that it can be properly regulated to prevent sales to minors, to protect the public's health and safety and ensure cannabis businesses behave as legitimate, tax-paying members of our economy," Chiang said.

He also said there's added urgency in the wake of this month's move by U.S. Atty. Gen. Jeff Sessions to revoke Obama administration guidelines that limited the Justice Department's interest in enforcing marijuana laws in states where the drug is legal.

That change could disrupt the already tenuous relationship between the banking and cannabis industries, as guidance used by some banks to accept deposits from cannabis companies relied on the now-revoked guidelines.

"The recent action taken by Atty. Gen. Sessions threatens us with new national divisiveness and casts into turmoil a newly established industry that is creating jobs and tax revenues," Chiang said.

Becerra's office did not immediately respond to a request for comment.

Marc Armstrong, president of public bank advocacy group Commonomics USA, said the rise of state-sanctioned cannabis has pushed the public bank conversation forward, illustrating what he says is one of the big problems with commercial banking: exclusion of wide swaths of customers.

"When you have such a large segment of the population excluded precisely because of federal regulation, you end up putting a spotlight on the glaring inequalities of the banking system and how inadequately it provides services to the economy," he said. "What's changed with public banking and the cannabis industry is, the lacking of banking services to the industry is more obvious."

While he's heartened by the growing momentum for state- or city-owned banks in California, he also said the kind of study Chiang's office is working on often focuses only on the costs, resulting in a lack of political will to move forward.

For instance, a recent study commissioned by Massachusetts' state Legislature recommended against creating a state bank, finding that the project would cost billions of dollars and that depositing state funds in a public bank could put taxpayers at risk.

"You need to have not only leadership but some creative thinking on how to crack this nut," Armstrong said. "Absent that, it will be 101 reasons not to create a public bank."